The Genesis India Consumer Indicator (GICI) rose to 62.44 in July from 60.00 in June, marking a new record high in the series.

The latest rise in consumer confidence was mainly due to a continued improvement in sentiment about future prospects for both business conditions and household finances. There were also smaller increases in sentiment towards current personal finances and current business conditions.

The only component of the GICI to decrease in July was durable buying conditions, which measures whether respondents viewed it as a good time to buy durable goods. The fall to the lowest since February, appears to be due to the introduction of GST cuts on July 27 after our survey finished. Evidence that respondents were postponing purchases to benefit from lower prices later came in the form of a large rise in respondents planning to purchase consumer durables over the coming three months, to a new record high.

The percentage of respondents in July who shopped online in the previous three months fell to 35%, down from 37% in the previous two months and from 39% in April. This decline also looks to be due to consumers putting off purchasing due to the cuts to GST. The percentage of those buying household goods online declined to just 9% in July compared with 21% two months ago.

In response to a special question this month, 15% of respondents said they were planning a leisure trip in the coming three months. We estimate that domestic spending on travel will account for some Rs. 1.65 trillion over the coming three months across India as a whole, a significant portion of GDP. International spending on travel is expected to total around Rs. 1.2 trillion.

Chief Economist of GMMR, Philip Uglow, said “The rise in confidence among India consumers continued in July with sentiment hitting a new record high. Due to the nature of the index, the cuts to GST on July 27 actually depressed overall confidence by postponing spending ahead of the tax reduction. Next month we are likely to see a strong bounce back in the key spending measures as consumers take advantage of lower prices.”

Notes to editors:

The GICI (Genesis India Consumer Indicator) is a unique monthly indicator tracking consumer sentiment across India. It is a composite indicator measuring consumers’ views on personal finances, business conditions and buying conditions for consumer durables. A result above 50 indicates respondents are on balance optimistic while a reading below 50 indicates that pessimists outweigh optimists.

The wider consumer survey contains a range of questions designed to measure consumer sentiment across various segments of the economy including Real estate, Automobiles, Consumer Durables and Essential Commodities.

Released on the 1st working day of each month the survey provides almost real time tracking of consumer sentiment.